Housing Values May Drop Over 50% In Silicon Valley (San Jose: loans, houses)

[Semiworker]

No one has a crystal ball. But you laid down a nice hypothesis.

However, most of us have been long time homeowners. House prices go up & down. It's just a number.
People who buy in the last 3 yrs including our son, are most at risk if there is an economic slow down.
He has a young family & they've hunkered down to build up a one year safety net. No need to whine. We did the same when we first started out. I would say it took us a good 10 yrs to fully furnish & landscape our house and feel somewhat financially stable.

If you follow what's happening there is now new tech interest & opportunities in AI (artificial intelligence), driverless cars development, IoT products (internet of things, or all things remotely controlled by mobile computers such as your phone) to name a few, and the Bay Area is in the middle of them all. So our tech economy is still very exciting with lots of opportunities.

Baring geopolitical events beyond our control, I think the Bay Area economy is trucking along just fine. Most of us just quietly live, work, raising our kids, and love it here.

And the area housing supply continues to run low...

[SportyandMisty]

Originally Posted by Perma Bear

Not really. I'm seeing faltering prices in the east bay.

I thought the only people who voluntarily live in the East Bay are in the Federal Witness Protection Program.

[xani]

The whole place will probably relocate to Bangalore soon, with only management living in Bay area.
Haven't Bay area seen semiconductor industry come and go? Software companies don't even need territorial infrastructure, unlike semiconductor plants, and can be fully remote/office-less.

[WestCoaster99]

Interest rates are rising.
There were two rate hikes by the Fed during last 90 days; three more rate hikes are planned for the rest of the year.

30 year mortgage was about 3% last summer; today it is 4.63% for Jumbo loans; it is anticipated to rise to 6% by summer of 2018. At 6% the mortgage payments are twice that of 3%.

In SV a mortgage holder is paying 43% of his income on mortgage; I don't believe he can pay 86% of his income on mortgage.

The homeowners at 3% locked in interest rates will hold on to the properties; however at 6% interest rates when they go to sell the properties, there will be no buyers.

[Perma Bear]

Originally Posted by SportyandMisty

I thought the only people who voluntarily live in the East Bay are in the Federal Witness Protection Program.

Considering even the ****ty city of Hayward has a median house price of 550k I'd say people like living there.

[WestCoaster99]

Why Silicon Valley tech workers are packing their bags for Seattle


http://www.bizjournals.com/sanjose/n...hoo&yptr=yahoo

[hanera]

Prices and rents are surging in East Bay. Prices are also going up in SV but rent is stable.

[Perma Bear]

Originally Posted by hanera

Prices and rents are surging in East Bay. Prices are also going up in SV but rent is stable.

All the Real Estate listings I see are going down in price. Maybe you time traveled from 2013-2014.

[TR95]

Originally Posted by WestCoaster99

Interest rates are rising.
There were two rate hikes by the Fed during last 90 days; three more rate hikes are planned for the rest of the year.

30 year mortgage was about 3% last summer; today it is 4.63% for Jumbo loans; it is anticipated to rise to 6% by summer of 2018. At 6% the mortgage payments are twice that of 3%.

In SV a mortgage holder is paying 43% of his income on mortgage; I don't believe he can pay 86% of his income on mortgage.

The homeowners at 3% locked in interest rates will hold on to the properties; however at 6% interest rates when they go to sell the properties, there will be no buyers.

You can still get a jumbo loan for 4.25/4.375% with no points. Once 30 year rates get to be 6%+, people will start to go with 10/1, 7/1, 5/1, 3/1 and 1 year ARMs. That's when it's a good bet prices are reaching the peak.

How do you know an SV mortgage holder is paying 43% of his income on a mortgage. Most if not all lenders will only go up to 42-43% total DTI ratio, so there's no way just the mortgage will be 43% of income.

[TR95]

Originally Posted by Perma Bear

All the Real Estate listings I see are going down in price. Maybe you time traveled from 2013-2014.

No, things are still going strong with multiples offers and increasing prices in Albany, Berkeley, and good parts of Oakland. Not sure about the further out East Bay areas. Maybe you're stuck in 2011, and hoping for something that might be a few years away.